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SEC expands application of scaled disclosures

The Securities and Exchange Commission has adopted amendments to its “smaller reporting company” definition to expand the number of companies that qualify for scaled disclosure accommodations.

The new smaller reporting company definition enables a company with less than $250 million of public float (the portion of shares in the hands of public investors) to provide scaled public disclosures. The prior threshold was $75 million.

The final rules also expand the definition to include companies with less than $100 million in annual revenues if they also have either no public float or a public float that is less than $700 million. This reflects a change from the revenue test in the prior definition, which allowed companies to provide scaled disclosure only if they had no public float and less than $50 million in annual revenues.

The amendments are intended to promote capital formation and reduce...

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